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Economy in Brief

EMU Orders Begin to Show Wear and Tear October 23, 2007
by Robert Brusca

Orders growth in the new quarter is decidedly weaker; foreign orders are declining

Orders trends are starting to show some of the expected trends but the country level data are still quite mixed up as to their trends. For EMU the chart on the left shows the clear declining pace of growth for domestic as well as export orders. Export order growth is the weaker series and that has been so since early 2006. Within the Euro area MFG sales have held up and show signs of acceleration, not of weakness (see table). The table also shows that the quarter-to-date growth rates are weak for orders of various sorts. Foreign orders are falling in Q3 at an 11.7% pace. Country by country, German orders are lower in Q3, French orders are moderate, Italy and the UK are strong - the UK very strong. Basically, the country level data remain pretty erratic. Monthly patterns show that Germany’s results are driven by a sharp drop in orders in July as the new quarter started. France has two order declines in a row tempered by a surge at the end of Q2 that elevated the level of orders for Q3 and blunted the impact of the next two drops. The UK is seeing some very erratic orders off by 6.5% in August after rising by 12.7% in July. On balance the overall EMU figures give our most reliable-seeming data. They show orders slowing on a broad front with international orders the weakest. With the strong Euro and all the complaining about it, there is plenty of reason to think that these are true trends.

Euro  area and UK Industrial Orders & Sales Trends
Saar except m/m % m/m Aug-07 Aug-07 Aug-07 Aug-06 Aug-05 Qtr-2-Date
Ezone Detail Aug-07 Jul-07 Jun-07 3-Mo 6-mo 12-mo 12-mo 12-mo Saar
MFG Orders 0.3% -2.6% 3.9% 6.2% 8.3% 5.9% 10.8% 6.9% 2.1%
MFG Sales 0.3% 0.3% 0.8% 5.5% 5.8% 6.6% 7.8% 3.9% 5.9%
Consumer 0.4% 0.4% 0.5% 5.2% 4.5% 4.7% 7.8% 3.9% 5.1%
Capital 0.5% 0.6% 0.5% 6.6% 6.6% 8.2% 4.3% 2.1% 6.5%
Intermediate 0.6% 0.6% 0.8% 10.0% 10.3% 3.2% 7.0% 3.5% 8.6%
MFG Orders                  
Total Orders 0.3% -2.6% 3.9% 6.2% 8.3% 5.9% 10.8% 6.9% 2.1%
E-13 Domestic MFG orders -0.6% 1.2% 1.7% 10.0% 10.3% 3.2% 7.3% 9.6% 11.6%
E-13 Foreign MFG orders 1.5% -9.3% 8.4% -0.8% 8.6% 6.3% 16.4% 7.5% -11.7%
Countries: Aug-07 Jul-07 Jun-07 3-Mo 6-mo 12-mo 12-mo 12-mo Qtr-2-Date
Germany: 1.2% -6.3% 5.3% -0.9% 4.2% 5.1% 17.0% 6.6% -8.1%
France: -2.7% -2.4% 6.1% 3.4% 10.5% 10.6% -5.0% 13.3% 4.6%
Italy -0.3% -0.2% 2.7% 8.8% 18.5% 0.2% 18.4% 9.2% 10.8%
UK -6.5% 12.7% 1.5% 30.4% 6.5% 3.1% -4.3% 25.0% 58.1%
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